tv Studio 1.0 Bloomberg March 26, 2016 10:00am-10:31am EDT
♪ francine: joining me today for an exclusive interview is the ceo of an italian shoemaker. the company's products range from foot wear, perfume, to eyewear, and it is still headquartered in florence. it was founded back in 1927. michele norsa has been head of the company since 2011. since 2006, and took it public in 2011. we talked to the ferragamo ceo about his growth strategy, and the future of the italian luxury
in a fashion industry. thank you for joining us. let's start with the focus on asia. is there still chinese growth for the luxury market? michele: i have no doubt. the number of people who are entering the middle class, the average income of the people, the culture, how they have been able to develop very fast, from travel,ree -- luxury to it is great potential. there is also the traveling aspect. there are more travelers, more curiosity. and changing destinations. they may be modifying spending behavior. francine: do you have to adapt your strategy? do you have to find out how the
chinese consumer spends, how the chinese consumer travels? michele: absolutely. i am trying to understand where they travel, and where they will go. there has been a clear evolution. from the beginning, only hong kong and macau were the achievable destinations. then you had australia, europe, and sometimes in mexico. a love of traveling. recently inside asia. there is in improving relationship between japan and china. francine: what surprises you the most about the chinese consumer? michele: the speed. francine: at which they shop or travel? [laughter] michele: the speed of evolution. they have been evolving from group traveling to individual traveling. they learn languages fast. all of the journalists speak two
or three languages, easily. they have been adapting themselves to food, to traveling conditions, and they get deeper and deeper inside brands. they are comparing prices. this is also an issue sometimes. we're also getting nicer relations. before, with the staff, it was a little bit cold. it is becoming more pleasant. there is more to come. francine: there is a crackdown on bribery, or gifts related to luxury items in china. has it affected ferragamo? or, because you are in shoes, has it not been affected as much? michele: in a certain moment, it affected everybody. you saw different behaviors in every area. in some months of last year -- in the year before, you could see the streets empty. not many more people are
carrying shopping bags. you could see the people, when they were asking carried in the second and first year cities, you could still see the normal behavior. the impact on corruption was very high. you could see how people from certain companies were not going to master or were not allowed. people were controlling their behavior. with the time going on, it meant a lot. this was related to more expensive items. francine: talk to me about the market turmoil. does it impact your sales? or does it make it better?
the psychology of this market turmoil that we saw last september, that we saw last january, i am not sure how it translates into your sales. michele: it is not an immediate relationship with the stock market. there has been a lot of things about the number of chinese, who are buying this, i don't believe there is so much direct involvement. i think the stock exchange is still closer to gambling and -- then it is to doing business. what you feel is the mood changes. this has been a mood towards hong kong. it is a strong impact move. the mood towards macau, travel visas, and in terms of growth of account, you keep finding everybody convinced about midterm growth of six or 6.2.
you see that kind of confidence. in the short term, there are moments where it is more difficult. francine: there has been a huge fall in the price of oil. that affects most of the emerging markets that are producers of commodities. is that a concern for you? you are also very exposed to europe and the u.s.. -- and the u.s. michele: if we talk about asia, of course materials and oil has been impacting. you should think also in terms of consumption. they are not producers. if you take japan or china, there will be consumers. the political risks after some time impacting, they don't know if korea is far from us. very close to seoul, south korea, and major chinese cities.
when there is devaluation, the debtor -- the devaluation concern -- francine: so much volatility. michele: exactly. they were higher last year. the currencies are moving reasonably. last year, they were very sudden movements. what is impacting probably is the size of the movement. all of a sudden, you have a self-contained moving percentages. francine: are you brave enough to make a call on the dollar? it seems most chaste economists do not -- chief economists do not. michele: no. what is more interesting is trying to understand the challenges. there will be a lot of challenges next year. also, see the opportunities. it is very difficult to work with a time frame that is longer than six months.
working with the middle east, tel aviv and so on, it could impact every day the market, even the news about securities, cyber security, which can impact us. i think what is interesting is the challenges displayed in a good way. take the opportunity. francine: coming up, putting the digital into fashion, ferragamo fights against fraud with microchips in its products. we talk innovation and protecting the value of the brand. ♪
♪ francine: welcome back. we are speaking to michele norsa. he is the ceo of ferragamo. it is the quintessential italian luxury goods company that it back in 1927. it was family-owned until it went public in 2011. from the opening of the first national stores, the company has expanded to become a key player in the global industry with shops in over 90 countries. thank you for staying with us. we were talking about the challenges. you are talking about the opportunities, geopolitics. what is the one opportunity you
cannot miss? is there a target consumer you need to reach? michele: the most difficult is millennials. in fact nobody is very clear , where they start or finish, but roughly 2.3 billion people age 18 to 30, they are moving fast, spending money in a different way. francine: why different? michele: they are always connected, and they are always comparing prices. they are trying to understand things. they are trying to understand what is new. at the same time, they behave conservatively. sometimes they buy products which have already been successful. this is what would be interesting to understand. also, the destination of how they will spend time. probably, leaping in a different
other people were at -- a few years ago. francine: this is a game changer. how much do we know about how much they look at celebrities? how much they are influenced by what they see on instagram or twitter? michele: celebrity is something that always works. from hollywood, also the local celebrities, the people who have -- are considered important in the asian life. korean actors, , hollywood, i think they are also moving the young people faster. they are creating, generating themselves a phenomenon. this appears in the way they the
are traveling, the way they are spending. the way they are traveling. they are traveling to resorts, not only to the big cities. they have a lot of background on where they're going. they could become better consumers than the generation before. francine: have you had to adapt your style? a lot of fashion shows have changed calendars to keep up with this season we do not have anymore. we don't have the four seasons. michele: i am not in favor of changing the tradition of an industry like italy, you have to think of what this produces. in italy we manufacture 100%. asa pipeline of project, timing, it must be completely different. we cannot imagine fast fashion
if you just want to win back the consumer. people need to see new products in the store. this is true. every time they want to see something new, sometime you may have even products. -- products in the fashion shows may be ready in one month, two months. you do not need to wait six months. we have to change in terms of changing faster the store, inside the store, having more colors, having more alternatives, more sizes, more things which are probably in the same team but different. , francine: made in italy still sells. michele: absolutely. this is something more important. made in italy means sustainability. the younger generation appears to be careful on sustainability. it means it is manufactured in a
, certain way, in factories that have very friendly processes, end-user and colors and materials. i think it is becoming even more important why you want to know where it comes from. francine: ferragamo has spearheaded the fight against fraud by micro-chipping the products. tell me about it. michele: in terms of privacy, we don't follow the microchip after it leaves the store. this is fundamental. we are not tracing the customer. what we are trying to do is trace the product along the world. -- around the world. trying to understand product that could be counterfeit product which could be mixed. it gives the consumer a guarantee that we do what we can
-- do the maximum that we can do. it often helps in closing stores, stopping operations, and giving the feeling that you are present everywhere. even in china we have favorable lawsuits. in the united states, you can close hundreds of websites. this is the area where the cyber security is becoming really -- francine: how much does it take up of your time? how are you worried about geopolitics, and understanding chinese consumer and fraud? michele: the consumer is probably the number one. geopolitics is number two. you must try to anticipate. you take into account what is happening. you do not want to gamble. counterfeiting, that is what everybody is following on the web. you're not concerned about finding a wallet in the market.
interview with michele norsa. he has been at the helm of ferragamo since 2006, taking it public in 2011. he has just been elected to stay in his post until 2018. we continue with a look at the company's future. we talked succession, possible m&a, and more. what worries you the most? i always talk about risks and rewards. you need to make sure you give back to shareholders. you need to put a succession plan in place. there is also speculation of being an m&a target. michele: the concern for the ceo of a family-public company is to create value, but create value from a long-term. we are not companies running after the quarter or we are under pressure to go over turnover. what are you trying to build is really sustainable growth.
what we tried is to have the confidence of the market. from the beginning, we believed we have been very open. we have tried to explain that we are still small. onere a company that is third of -- one half of some of the major competitors. we have room to grow. francine: do you feel vulnerable? if you look at these big french companies, they are buying everything up under the sun. do you think it is an opportunity? how much time do you spend if you have to defend yourself? michele: i felt vulnerable with -- until we reached 1.5 billion. i don't think it is big enough in terms of the potential to invest. the market has appreciated the focus of the company.
the most successful companies are not the groups, they are the companies focusing on their own brand. you have to know. you have to know everything for you to know the value of the company. you have to know how people move inside the companies. the evolution of the ceo. this is information you must have every hour. francine: you must have plans to retire at some point. how much do you think about your succession plan? is it someone from the family? michele: i don't want to say anything. the family has gone public, because they knew the number of shareholders was getting bigger. when i joined in 2006, it was --
i would not have imagined to stay as ceo for 10 years. as a ceo, you have to have more, to do more at the same time. it makes sense to think about somebody who is like you. a younger, but probably on the other side the ceos tend to be , very centric and there is something you should do. doing it in a good way is also often the most important objective in your mind. francine: what you like about -- what do you most like about your job? you must love it. you have been at the helm for a long time. michele: i enjoy working with people in a global way. for me, the most interesting thing every morning is to open up and see what did they buy and what did they do? why are the chinese going to puket?
what we can develop in terms of service. why you cannot change a new pair of shoes. we are in an industry that is evolving every day. in a very global way. also working with people. , francine: how do you do your research? do you look at sales figures? michele: i watch -- we have 380 stores. i watch the figures of all of the stores every day. i would go to the biggest one, definitely. maybe not in the morning, but at the end of t day, all of it, not so when i joined the company. i will call the ceos and try to understand why macau was doing well or not. this also creates pressure from the people who are working. they know i am looking and they must know themselves and you get
-- themselves. you get all of the information, details. about the traffic in the stores. about the ticket. it is interesting to see how these consumers are spending around the world. francine: because it has changed? michele: no. it is too similar. what is surprising me is you can get a ticket which is five times and then at the end it is $50 or $100 different. it is surprising to me. i would have expected a bigger difference. when you look at large averages , they tend to -- francine: it was a great pleasure to have you in the program. thank you. michele: thank you very much. ♪